Can't Place Conventional Loan Title in LLC?

7 Replies

My mom's mortgage broker told her this:

"A conventional loan, Fannie, Freddie, or VA, FHA do not allow title into a LLC. Commercial loans (5 + units apartment buildings) allow it but not for residential. Or an Alt A lender allows it but the interest rate is much higher than a conventional loan."

in response to the question - How hard is it to obtain a mortgage loan with an LLC? Is he smoking rocks, or is this true? Can you not do a conventional loan with an LLC? All LLC folks here have Alt A or commercial loan?

Conventional for individuals.

Commercial for llcs.

Decide which is more important to you, asset protection or better borrowing terms.

Agreed to get in LLC either buy for cash or commercial loan. Only other option I see is getting into a land trust situation and having the land trust own LLC that have the properties in them that it buys. But, That is a something I do not completely understand for all the states (which have their own laws/regulations on it) Also you could do generational trust.....Not sure on all the requirements for all the states on this one either.

Good Luck!

Originally posted by @Russell Brazil :

Conventional for individuals.

Commercial for llcs.

Decide which is more important to you, asset protection or better borrowing terms.

He said the commercial loans do not do SFR. Is that true?

Soo there is absolutely no way to do a conventional loan AND place the title in LLC? Everyone on this site with a SFR and LLC has alt-A loan or owns the property outright?

@Aaron Moayed

You can do commercial loans on sfr.

Everyone on the site just violates the terms of their mortgage, and creates a situation with an easily piercable llc by holding the mortgage in their name and the property in an llc. So they think they are protecting their assets, when in reality they are doing the opposite of what they actually intend.

Originally posted by @Russell Brazil :

@Aaron Moayed

You can do commercial loans on sfr.

Everyone on the site just violates the terms of their mortgage, and creates a situation with an easily piercable llc by holding the mortgage in their name and the property in an llc. So they think they are protecting their assets, when in reality they are doing the opposite of what they actually intend.

You can do commercial loan on an SFR via an LLC (get a commercial loan through the LLC for a SFR)?

Originally posted by @Russell Brazil :

@Aaron Moayed

You can do commercial loans on sfr.

Everyone on the site just violates the terms of their mortgage, and creates a situation with an easily piercable llc by holding the mortgage in their name and the property in an llc. So they think they are protecting their assets, when in reality they are doing the opposite of what they actually intend.

I got an answer to the last question I just asked, but I had posted this in another section and the response said that Fannie Mae backed loans allow for transfer to an LLC

https://www.fanniemae.com/content/guide/servicing/...

My question then is: is this still doable/overwrite a "due on sale/transfer" clause? Like if there's a due on sale/transfer clause initially, and fannie mae backs the loan, can you transfer into the LLC without the due on sale clause option being exercised?

@Aaron Moayed Yes, it's doable. You can get the loan in your personal name, then after closing, Deed it into your LLC. It violates the Due on Sale clause potentially, but lenders rarely, if ever, care so long as the mortgage keeps being paid.